Oracle shares soared nearly 8% in after-hours trading on Wednesday after the company issued an upbeat forecast for its cloud computing business, signaling a doubling of contract orders next year. The announcement marks a major leap forward for the $500bn tech giant as it aggressively pivots toward AI infrastructure and cloud services.
The Financial Times reported that Oracle’s fiscal fourth-quarter revenue rose 11% to $15.9 billion, surpassing Wall Street’s expectation of $15.6 billion. Chief executive Safra Catz credited the momentum to explosive growth in demand for cloud infrastructure, forecasting that Oracle’s cloud business will grow more than 70% in the next fiscal year.
“Oracle is well on its way to being not only the world’s largest cloud application company — but also one of the world’s largest cloud infrastructure companies,” said Catz.
Despite entering the cloud race later than competitors, the Austin-based company is now seeing surging demand as enterprises scramble to power AI workloads. Oracle’s data center infrastructure business rose 52% in the most recent quarter.
This momentum has been fueled by Oracle’s recent strategic partnerships, including involvement in OpenAI and SoftBank’s $500 billion Stargate initiative. Oracle is also collaborating with Meta and Elon Musk’s AI startup xAI. Last month, the Financial Times revealed Oracle would invest around $40 billion in Nvidia chips to support OpenAI’s Stargate data center in Abilene, Texas.
The company began providing computing capacity to OpenAI last year when Microsoft, OpenAI’s primary backer, experienced infrastructure constraints.
Oracle is also positioning itself to play a critical role in the anticipated divestment of TikTok’s US operations. The Biden administration has set a June 19 deadline for a deal with ByteDance, and Oracle — which already hosts TikTok’s data on its servers — is expected to secure the app’s US data infrastructure and potentially take a minority stake alongside other American investors.
However, some investors remain cautious. Oracle carries significant debt and trades at a higher price-to-earnings ratio than cloud rivals like Amazon, Google, and Microsoft. Still, the company’s capital spending for the quarter surged to $9 billion — more than double analyst expectations — highlighting its aggressive bet on becoming a top-tier cloud and AI infrastructure provider.
